States team up for e-buying

Colorado and Utah will launch a joint Web-based procurement service soon

that apparently is the first such interstate system.

The neighboring states will test the system in a pilot project beginning

Aug. 27 that will involve three agencies from each state and a combined

40 vendors. If all goes well, more agencies and vendors from both states

will be allowed to join later this year or early next year. Eventually,

the system will be accessible to municipalities and other government entities,

said Richard Pennington, Colorado's state purchasing director.

Under the five-year contract, NIC Commerce, the e-procurement subsidiary

of NIC, is developing the system at no cost to the states. It will recoup

its investment through a 1 percent transaction fee charged to suppliers.

Pennington said that in 1999, Colorado solicited comments from vendors about

building an e-procurement system at no cost to the state. Vendors were concerned

the state wouldn't have enough orders flowing through the system to generate

sufficient revenues, he said, so to minimize the risk, vendors suggested

Colorado build it jointly with one or more other states.

In February 2000, the idea was brought up at the Western States Contracting

Alliance, a consortium of state purchasing directors from 15 western states

that supports multistate contracting for products and services to save money.

Pennington said that because e-procurement was still a new idea, most states

didn't want to commit — except for Utah.

Utah is close to Colorado "in terms of our e-maturity," he said, adding

that both states have similar public procurement rules, making a joint project

a good bet. After a competitive bidding process, the two states signed NIC

Commerce to a contract in January 2001.

Pennington said not only will cities, counties, school districts and other

"political subdivisions" be allowed to join later, but the provision allows

other states to be added to the system in the future. After two years, the

states and NIC Commerce will review the system's performance and possibly

revise the fee structure or try to increase adoption of the system, he said.

Like other states that have developed comprehensive e-procurement systems,

Utah and Colorado hope to get better prices on goods and services, track

orders better, issue electronic bids and quotes, and streamline operations.

But Pennington said officials are also looking at the system as a way to

re-engineer other state government processes, such as making and tracking

travel arrangements, payments and approvals.

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